US equity indexes experienced a notable downturn on Thursday as they reacted to comments from Commerce Secretary Howard Lutnick amidst a perceived capital exodus towards Europe and Asia. The Nasdaq Composite fell by 2.4%, settling at 18,106.1, while the S&P 500 slipped 1.8% to 5,735.4 and the Dow Jones Industrial Average decreased by 1.1% to 42,511.3.
The downturn was led by declines in sectors such as real estate, consumer discretionary, and technology, with all sectors exhibiting weakness throughout the trading day. In a key development, President Donald Trump may choose to delay the implementation of 25% tariffs on goods and services from Canada and Mexico, as part of the USMCA regional trade agreement.
According to a report, Trump is expected to make a decision soon regarding the range of a one-month exemption on these tariffs. Lutnick expressed optimism during his CNBC interview, stating, "I think it's likely it will cover all USMCA-compliant goods and services." This exemption is projected to remain in effect until April 2, when Trump is anticipated to introduce new tariffs, including "reciprocal" import duties affecting numerous countries and influential sectors, such as automobiles, pharmaceuticals, and semiconductors. On the interest rate front, most US Treasury yields saw an uptick, with the 10-year yield rising by 2.9 basis points to 4.3% intraday.
Meanwhile, the German 10-year yield reached a distinct 52-week high on Thursday, following an impressive surge, reaching the highest increase in a single day observed since the reunification of the country 35 years ago. This spike was attributed to an announcement regarding the government’s defense and infrastructure program.
Financial markets are rigged to accommodate what analysts are dubbing a once-in-a-generation policy regime shift, initiating a significant risk-on movement toward European assets, a perspective shared in a note from Deutsche Bank. "The ongoing US isolationism is propelling plans for European debt issuance, which are essential for nations to operate independently," remarked Derek Holt, Scotiabank's head of capital markets economics.
"The repercussions on equities suggest a trend of capital movement from US stocks into European and Asian benchmarks, a shift that has been notable throughout this year." The CBOE's volatility index VIX, often referred to as the fear gauge, witnessed an increase of 11%, hitting 24.28. In economic developments, US layoff announcements surged to 172,017 jobs in February, marking the highest monthly total since July 2020, largely due to cuts in the government sector, as reported by outplacement firm Challenger, Gray & Christmas. Initial jobless claims in the US fell to 221,000 for the week ending March 1, down from 242,000, despite analyst forecasts anticipating a decrease to 233,000 as compiled by Bloomberg. Additionally, the January trade deficit experienced a significant increase, swelling to a record $131.4 billion, up from $98.1 billion the previous month, exceeding the FactSet consensus estimate of a $96.6 billion gap, caused by a dramatic 10% surge in imports. In company-specific news, shares of MongoDB experienced a sharp decline, falling 24% intraday, after the company’s fiscal 2026 guidance did not meet analysts' expectations, marking it as the most significant decliner on the Nasdaq.
Similarly, Marvell Technology’s shares plummeted by over 18% intraday, making it the second-worst performer on the Nasdaq. Despite this slump, Deutsche Bank mentioned that Marvell's positive risk/reward outlook might present a buying opportunity following the dip after its fiscal Q4 results were revealed. Furthermore, West Texas Intermediate crude oil futures fell by 0.8% to $65.79 per barrel, while gold futures remained stable at $2,925.31.
In contrast, silver futures experienced a rise of 0.6%, closing at $33.34..